It seems as if everyone in the dairy business is out to stop Hein Hettinga, a prosperous dairy farmer who just happens to sell about the cheapest milk in the nation.

First the U.S. Department of Agriculture passed regulations, effective April 1, that would effectively curtail Hettinga’s business. And now, Congress is considering a bill-called the Milk Regulatory Equity Act-which would do the same thing. It’s scheduled for a vote Tuesday in the House of Representatives, having already passed the Senate.

The government’s actions have come at the behest of Big Dairy, the nation’s biggest milk bottlers and cooperatives who believe that Hettinga has an unfair advantage. Unlike most dairymen, Hettinga milks cows and bottles the milk himself, a sequence that usually involves a farmer, a cooperative and a bottler.

But where typical bottlers are regulated by the government, which requires them to pay dairy farmers a minimum price determined by the USDA, Hettinga and the few other “producer-handlers” in the nation have long been exempt.

The reason that Hettinga is caused such a stir is that unlike most other producer-handlers, who are relatively small and local, he is among the largest dairy farmers in the nation, with 15 massive dairies stretching from California to west Texas.

His five dairies in Arizona send milk to two bottling plants in Yuma, on the border of California, and they in turn ship milk to Sam’s Club, Costco and other retail outlets in Arizona and southern California. There, Hettinga’s milk sells for about $1.99 a gallon, sometimes less.

By comparison, an USDA survey found that a gallon of milk in Chicago costs twice as much, $3.99 a gallon, making Chicago among the most expensive milk markets in the nation.

The vote in Congress is scheduled a day before Hettinga is scheduled to appear in federal court in Texas, where he has filed suit against the USDA to block their regulations from taking effect. In essence, Hettinga’s lawsuit argues that the USDA doesn’t have the authority to regulate him.

Alfred Ricciardi, Hettinga’s attorney, argued that the timing of the vote isn’t a coincidence. The bill is part of the House “suspension calendar” which is typically used for items that don’t warrant any debate. For instance, besides the milk bill, Tuesday’s suspension calendar also includes a resolution recognizing “the life of Wellington Timothy Mara and his outstanding contributions to the New York Giants Football Club, the National Football League and the United States.”

“It’s an effort to slide this through without any floor debate, without any discussion whatsoever,” Ricciardi said.

In the lawsuit, Hettinga argues that the 1937 statute that created milk regulation specifically refers to bottlers that “purchase” milk. Since Hettinga doesn’t purchase milk from himself, the regulations shouldn’t apply to him, the lawsuit says.

The bill in Congress would effectively render the lawsuit moot, Riccardi said.

“My argument that there was no authority (for the USDA to regulate Hettinga) arguably gets eradicated,” Riccardi said, adding, “Every time where I think I’m pushing in the right direction, they push at me from behind.”

Opponents of Hettinga say the exemption for producer handlers was intended for small mom-and-pop dairies. Hettinga’s operation is so big that he has depressed annual revenue for other Arizona dairy farmers by $11,000 to $17,000 a year and made it difficult for other bottlers-who have to pay the federal price to farmers-to match his milk prices.

But Hettinga says that there is so little competition in the dairy business these days that the major players-such as Dean Foods and the Dairy Farmers of America-are routinely overcharging consumers. He notes that he is still making a hefty profit when his milk sells for $1.99 a gallon.

Indeed, USDA statistics show that the base cost of producing whole milk in Arizona is about $1.34 per gallon, excluding such costs as packaging, labor and shipping.

If Hettinga’s efforts to block the USDA’s regulations are unsuccessful, he estimates that he would have to pay about $3.5 million a year in a federal pool of milk revenues, money that would essentially be split among his competitors.

Comments

At last! A bit of info about Costco milk.
Explanation: In San Diego, CA, Costco sells gallon jugs of milk at about $1.99/gal as a "twofer": you have to buy two of the jugs, joined at the neck siamese twin style. Most of the regular grocery chain stores match this price and enforce the twofer model.

I bought the Costco brand for years, mainly because of convenience (I go to the regular grocery stores less often than I run out of milk). But alas, several years ago we opened a gallon of milk freshly purchased from Costco and gagged at the taste. Some vile flavor, not one of spoilage, permeated the milk. Costco soon sent out letters to all members, apologizing and offering two free gallons, saying that the flavor was not a health hazard and that the problem was ephemeral and would not reoccur. We picked up our free gallons, but the flavor was still there! I could NEVER get any info on what was the source of the flavor. I contacted Costco (no response), the various milk associations one can find on the Internet (no response), and Googled the hell out of every phrase/term I could think of to see if there was any discussion of the Costco milk flavor. Nada!

It has been years since this happened and the milk at Costco still tastes like that same weird flavor, which I can only describe as sort of like moldy oranges---sort of "penicillium-like." It probably is something in the milk-cow feed, but why??? No other brand of milk I have ever bought has that definitely unaccceptable flavor. I can only imagine how many kazillions of kids are growing up learning to hate milk because of this.

Anyway, if Hettinga's cows produce this milk, then I hope Hettinga is dropped as Costco's supplier!

I would love it if anyone out there could tell me what that flavor is and why the Costco milk has it.

Posted by: Honest Response | Mar 27, 2006 1:35:53 PM&nbsp

I would find this post much more useful if you 1) told us how much Hettinga pays his workers, and 2) whether or not Hettinga's workers are in this country legally.

Posted by: Mark Gisleson | Mar 27, 2006 2:45:09 PM&nbsp

Some perspective:

"By comparison, an USDA survey found that a gallon of milk in Chicago costs twice as much, $3.99 a gallon, making Chicago among the most expensive milk markets in the nation."

The USDA survey does not take into account vanity milk suppliers like Oberweis dairy, which charge a returnable fee for glass bottles, delivery fees and other extra charges. To anyone who's took basic statistics in college this is what's called an "outlier," a price so extreme that it throws off the mean - or average - price and makes it seem higher than it actually is. Therefore, if you eliminate Oberweis, the "average" price for milk in Chicago is much cheaper.

I get my milk at Costco, too, and I don't think it's Mr. Hettinga's (I've never had the experience the above poster had) but the price I pay is usually between $2.09 and $2.25 a gallon. The people paying $3.99 a gallon need to get a clue and shop around a bit more.

Posted by: Bill | Mar 28, 2006 10:29:20 AM&nbsp

It ccould be that some people have to pay for transportation to ge to costco so the milk would be much more expensive to buy at costco than at a store wher you could walk to would be.

Posted by: Richard Warmowski | Mar 28, 2006 4:55:43 PM&nbsp

Sorry that my initial post disregarded the actual issue:
Today the vote on S 2120 (H.R. 4015), the Milk Regulatory Equity Act, "to suspend the rules and pass," was 285/128 yea/nay (the roll call may be found at http://clerk.house.gov/evs/2006/roll069.xml).

I see that the California Democratic Representatives with whom I am most familiar (Bob Filner and Susan Davis) voted yes, and Filner was a cosponsor. The bill was introduced by Devin Nunes (R, CA) last October.

Based on a summary of the Act by the Dairy Farmers' Association at http://www.idfa.org/news/stories/2005/11/mrea_builds.cfm, this Act is largely being promoted by Republicans. California Congressmen Filner and Susan Davis are progressive, but their districts are heavily pro-Republican and pro-business, and the pressure is especially on Filner to oblige his constituent dairy farmers in a district that runs from San Diego to the Mexican border, and east to the California/Arizona border.

I would very muchlike to know the details of the profit margins and especially the labor costs. Perhaps Hettinga benefits from the statistical average $13,000 lower annual wage paid to workers already in the US under various guest-worker programs, as compared to workers doing the same jobs but who are US citizens.

I object to reducing competition and being forced to pay more for milk, but I also do not believe that having a labor supply that is desperate enough to work for lower than average wages benefits all of us in the long run.

I also believe that milk is one of the basic foods that everyone in this country should be able to afford. Milk is fundamental to good health of developing children and the calcium content provides long-term health benefits as a population ages.

I doubt that any of the complex issues concerning nutrition and labor/wages were discussed during the course of this bill's passage: the lobby effort was huge and well organized, and in the end, that seems to be what matters.

Posted by: Honest Response | Mar 28, 2006 7:22:44 PM&nbsp

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